The participants on AFB tend to be bullish on Apple and long the stock, but they’re smart investors and have good antennae for anything that could affect their holdings — up or down. So I was interested to see how they would respond when a member who calls himself (or herself) “lumi” opened a new thread early this morning with these questions:

What are the chief potential stumbling blocks, things that *could* either delay or derail AAPL’s projected growth trajectory? What events would be red flags or precursors to correction or erosion?

The early responders have taken the challenge seriously, as they usually do on AFB, and offered answers that are quite insightful. The most interesting so far was posted by Alexis W. Cabot, an investor based in Rome. With his permission, I quote it in full:

Steve Jobs continued leadership of the company is still essential. We all know how his idea of what works and what doesn’t permeates the decision thinking process at Apple, but Apple must learn to do without him, otherwise it will not be a great company. General Electric has done a great job at creating internal leaders that are excellent managers and have kept the company at the top of corporate America for a century. Apple must have it’s own management creation process in place.

Corporate hubris. Signs that the company starts believing it can do no wrong and that customers will buy anything they produce will be when the company has peaked. Apple went through this phase in the late 1980’s and we all know how that ended. Apple’s insistence on revenue sharing with the networks just to sell a Jesus Phone would be nice for us shareholders, but there is a wider world out there that has laws against such restrictions on trade. I hope that Apple/SJ doesn’t shoot itself in the foot if it insists too much on these revenue sharing deals.

Inability to build lasting partnerships. As SJ himself said at All Things Digital that Apple has to learn how to make better partnerships. Never has Apple needed more content and networking partners than before. It needs to work with music and movie companies, with it’s own set of histrionics, and then with the highly regulated and staid cell-phone networks.

Souring US relations with China and the rest of the world. A trade war between the incumbent superpower and the aspiring one are likely to derail Apple’s (and most of corporate America) growth. It will be more expensive to outsource and then sell to China, which has one of the most rapidly growing and homogeneous middle classes of the world. Given the poor job the US has done in managing its international relations, this is a growing possibility. (link)

UPDATE: This topic is still going strong on the Apple Finance Board, and includes some remarks that were ported over from the comments here. Below the fold, a summary by “lumi” of the first day’s posts.

Counter: Growth is the crack of Wall Street and may be rewarded in any market (Gartman says buy only AAPL, RIMM, and GOOG right now, Cramer says pay up to double the growth rate on a forward PE for great stocks with good prospects), betting against the consumer is a risky play itself

Counter: Apple is developing/grooming future leaders, corp culture of innovation is bigger than one person and this strength will power future Apple products, Jobs is in the defining moment of his career (again) and isn’t going anywhere anytime soon

Risk: Corporate hubris

Potential negative: Overlook competitors, consumer desires

Counter: Company has evolved, Jobs learned lessons last time around and is unlikely to repeat them, current evidence about customer satisfaction, buzz, demand all indicate Apple continues to foster interest and loyalty

Risk: Apple doesn’t play well with others (partnerships)

Potential negative: Isolation, viewed as niche player

Counter: AT&T, O2, T Mobile, Orange, Starbucks, Best Buy, etc., once again — Jobs learned this lesson the first time around

Counter: Too much interdependence to allow for such a breakdown between the two countries, even if possible it’s surely not imminent

Risk: International/Asian disrespect for IP, patents, trademarks

Potential negative: Innovation unprotected from global copycats

Counter: True innovators always a step ahead, Redmond’s photocopiers produced enhancements but still led to Vista

There are some key exceptions (economy, China, legal issues), but most risks identified thus far are largely dependent upon Apple and its execution — which has been quite improved in recent years. That gives me comfort concerning many of these potential pitfalls.